Reform Party remains unwavering in its decision to have Daniels Pavļuts appointed as Economy Minister. Talks about this with PM candidate Laimdota Straujuma could take place this Sunday, January 19.

If Daniels Pavļuts is not invited to join the next government, Reform Party may come over to the opposition. ‘Our main principle for work in the new government is responsibility and readiness to finish our work. This is why RP has decided to have Edgars Rinkēvičs, Rihards Kozlovskis and Daniels Pavļuts remain in their posts,’ – RP press secretary Mārtiņš Etkins toldLETA.

RP Chairman Edmunds Demiters says ‘the Board was surprised when Laimdota Straujuma had publicly announced her opinion of Daniela Pavļuts as Economy Minister candidate before RP had made its choice, which is rather impolite. Though Straujuma’s honesty is admirable, the Board believes the arguments she voiced were untrue. Therefore, in accordance with the mutual agreement memorandum, including Unity’s and Reform Party’s mutual responsibility for the next PM candidate, the Board of RP will ask for a meeting with PM candidate Laimdota Straujuma and Unity’s Board, so that this matter can be resolved in private.’

In terms of taking responsibility for the Zolitude tragedy, Pavļuts mentioned the letter he wrote November 25. In this letter he explained he did everything he could to make the new Construction Law as strict as possible. ‘Thanks to the combined efforts of [then the head of National Economy Committee] Vyacheslav Dombrovskis and [current head of this committee] Jāņis Ozoliņš, we have managed to achieve the result we were hoping for – Saeima approved the law,’ – says the Economy Minister.

Pavļuts denies reprimands that the necessary legal requirements are not likely to be completed by February 1. He adds that there are many regulation project to handle and too little time for all of them. Nevertheless, Pavļuts said he and his colleagues will do all they can to make sure everything is in order. It is also important to remember that some of those projects were not developed in time.

Straujuma may not want Pavļuts in the new government because of the business interests of her son Ģirts Straujums. If Economy Minister Daniels Pavļuts does not end up in the new government and Economy Ministry returns to its green energy subsidies policy, businesses of sponsors that support influential political parties could draw a second breath.

This includes the business of once the largest bio-ethanol producer and generous sponsor of Unity Donats Vaitaitis, whose company had appointed the son of Laidota Straujuma – Ģirts Straujums – to the Board last summer. This could mean a conflict of interests for Straujuma if Pavļuts is not invited to remain in the government, Pietiek writes.

When Kampars was the Economy Minister, the state provided generous subsidies to bio-ethanol producers. This guaranteed great wealth for Vaitaitis. He donated LVL 72,000 to four political parties during the 10th Saeima elections.

Three months after the generous donations, the ruling coalition led by Valdis Dombrovskis decided to allocate LVL 24.4 million from the state budget to Vaitaitis’ JP Terminals for the construction of a bio-ethanol production plant on the territory of Riga Freeport.

BNN publishes fragments of interviews with the Economy Minister that took place October 2012. Even though Latvia’s political situation has changed, Economy Minister’s replies may reveal who and why would benefit from him being removed from the government.

Recently we have seen fierce opposition against the Reform Party (RP) ministers, including you. Have you crossed some serious interests or is it turned against the party as a whole?

Both. The government has now been working for some time and it is more or less clear what the ministers do. Those highly dissatisfied with the ministers’ work have formed groups, so that they can target them more actively. Besides, the pre-election period before local polls has started off and also the next year’s budget is under way. The timing is a real minefield. As a newcomer to the coalition, the Reform Party sticks to its programme and the Government Statement. So the backlash is not surprising at all.

There is no easy way – be it regional development, education, energy or business – state aid, management of public and municipal companies. These are all areas with long-standing issues. They have long developed certain political and economic systems, which are interested in maintaining the current balance. You try crossing their way and they immediately attack like wasps.

I suspect that they are also targeting individual ministers, who all have crossed their interests in one or another way. It turns out RP ministers are not the only reformists. Other minsters are dealing with soaring issues as well. I wonder why they have not yet ‘joined the club’. But this can no longer be said about the Welfare Minister Ilze Vinkele.

Who are those whose interests you have crossed?

The Ministry of Economy controls huge resources. Although the EU funds programming period is coming to an end, we are still looking at some serious economic issues – public and municipal companies as well as fund programs.

We have highlighted a number of problematic areas. First and foremost it is energy – issues related to state aid for the production of electricity using gas, renewable energy and cogeneration.

Long-term energy strategy has already been handed over for public discussion and highlighted in the meeting of the State Secretaries. It features clear long-term vision on changes, leading away from the historical policy carried out only in the interest of the energy itself and the involved businesses. Now we have to make slow, difficult and painful effort to change the direction, so that the energy sector benefits people.

Second, it is reforms in the management of public and municipal companies. Disputes with the Privatization Agency are nothing compared to what serious issues the government is addressing now.

Back in spring, long coordination process and arguments finally allowed the government to come up with two concepts – on public authorities’ involvement in business and changes in the management of public and municipal companies.

During summer we developed new bills, which have already been sent for harmonization. I can’t wait for the findings. There will be many arguable issues around the financial supervision, dividend policy and the independence of the new body that will control the state capital management.

I expect attempts to narrow the whole debate down to the issue of supervisory boards. It is close to populism. Meanwhile, there is a lack of clarity as to why some companies are owned by the state and municipalities at all.

How much has been done in the fight against oligarchs since RP joined politics?

In the parliament there is little left of parties with direct ties to oligarchs. Both the government and the parliament have adopted a series of decisions that go against the interests of oligarchs. Their influence on the decisions of the parliament and the government has practically faded, but there are also some signals that it still lingers.

Let’s take ports as an example. Their activities are gradually becoming more logical. Too slowly, but pretty regularly we find out about various shortcomings and blatantly unlawful acts.

The Reform Party has succeeded in changing regulations on freeports, which now have to provide greater transparency, for example, by publishing the minutes of board meetings.

But some things have turned out different than planned. At times we see transparency only on the surface. But things are indeed moving on. A country is like a huge ship – it cannot change the direction quickly. One can set up a show and pretend that things are now different, but time and determination are needed to change the very essence. We are moving in the right direction, but personally I feel that it should be done faster.

Do you mean freeports?

Including freeports. I will only say that freeports have changed when one of them carries out a major investment project in collaboration with internationally renowned partners and when people see the port working on a quality investment project that benefits the whole economy. I will say that when the project has been implemented in a transparent manner and investors approve of the business climate.

Are Latvians slow to adapt to reforms?

Initiators of reforms should always deal with that. Changes do not come easy. Often people demand reforms, without being willing to change their lives. There is always a certain fear factor even if we are in a situation that we do not like. It is because we never know where changes will take us. Let’s take the education sector as an example. It has seen many reforms, so it is already tired of them.

But I am not saying that Latvians are not ready for reforms. Just the opposite – during the past 20 years they have absorbed, understood, lived through and carried out numerous changes. So it is hard to imagine a nation, which could have done that better.

We could perhaps say that others, for example, the Poles or Estonians, have been more successful at this. But Latvians’ ability to accept new rules of the game is each reformist’s dream. Latvia is a mobile and adaptive country, its people – very patient and quite understanding. Sometimes they do, of course, lack comprehension of highly specific issues, but that can be solved.

You once said that ‘when other countries take just one step, we either have to take two or run’. Is Latvia doing that?

Of course, we have to run faster than others and compete in all matters. We do not have any extra time, we are a small economy that has been exposed to global winds. Since joining the European Union and opening of labour markets, human capital has become mobile. We are competing with other countries not only for investments but also for our own people – human capital.

To improve the future outlook, we have to move faster than others. We are already doing it in many areas. Take a look at how quickly Latvian companies have switched from domestic consumption to export.

But we have to admit that the share of exporting companies is not large. According to the Central Statistical Bureau’s preliminary estimates, in 2011 there were 80 591 companies in Latvia. Only 5 601 of them were involved in export.

Boosting productivity is one of our main challenges. We all would like to make more money, but we can afford to pay salaries that match productivity. We have to keep pursuing productivity boost. We need to learn new technologies, because in future it will not be possible to permanently pay high salaries to low-skilled people.

But it is exactly low-skilled people who tend to leave the country.

Given the current development level of Latvia, people who do simple jobs, cannot expect to be paid the same as in developed countries. I understand people who want to earn more, and I am not blaming them for their personal choices. But we ourselves are responsible for them. People can retrain, so that they can work in an area, which allows to make more money.

We also need to think of ways to help employees turn into employers. A lot of people, who have left Latvia, still carry it in their hearts. From stories in the media, we see that there are also people who are offered to return and start business here. I am confident that in future many companies will be founded by people who return and place savings in their own business.

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